Presentation by: Jean Galand Regional Statistics Advisor

1. Joint Workshop on Asymmetries in Bilateral Remittances Data(BDL, CBJ, ESCWA, and METAC) Institute for Banking Studies (IBS) Amman, Jordan April 24-25, 2013 Presentationby: Jean Galand Regional Statistics Advisor

2. Overview • Importance of remittances (globally, at regional level) • Interest of international community for development of remittances (facilitating remittances, and improving statistics) • Remittances Compilation Guide (Luxembourg Group) • Improving statistics in the region (2 METAC workshops) • Agenda

3. Importance of Remittances Worldwide Recent data released by the World Bank (Nov. 2012) • Remittances to developing countries: $406 bn in 2012 (+6.5%) • Projections: +7.9% in 2013, +10.1 in 2014, and 10.7 in 2015 ($534 bn) • Worldwide remittances: $534 bn in 2012, growing to $685 bn in 2015 • Top recipients (2012): India(70 bn), China (66), Philippines & Mexico (24). • Although migrant workers are, to a large extent, adversely affected by the slow growth in the global economy, remittance volumes have remained remarkably resilient, providing not only a vital lifeline to poor families but a steady and reliable source of foreign currency in many poor remittances recipient countries,” said Hans Timmer, Director of the Bank’s Development Prospects Group

4. Importance of Remittances Worldwide • Regions and countries with large numbers of migrants in oil exporting countries continue to see robust growth in inward remittance flows, compared with those whose migrant workers are largely concentrated in the advanced economies, especially Western Europe. • Thus, South Asia, MENA and East Asia and Pacific regions, with large numbers of workers in the GCC countries, are seeing better-than-expected growth in remittances. For South Asia, remittances in 2012 are expected to total $109 billion, an increase of 12.5 percent over 2011; East Asia and Pacific region, is estimated to attract $114 billion, an increase of 7.2 percent over 2011; while MENA is expected to receive $47 billion, an increase of 8.4 percent over the previous year.

5. Importance of Remittances In the Region: gross outflows of GCC countries (USD bn)

6. Importance of Remittances In the Region: gross inflows in METAC countries (USD bn)bn)

7. Interest of international bodies for the development of Remittances • Remittances to developing countries are more than 3 times the amount of Official Development Assistance (ODA). In light of these figures, many governments now consider remittances to be of high policy interest and wish to analyze their impact on economic development, as an important anti-poverty tool, but also on security (as financing of terrorism and money laundering may use the same channels as remittances). • Already in 2004, at its meeting at Sea Island (GA, US) the G-8 Heads of State identified remittances as an important factor in defining their relationships with developing countries. Since then, they have been promoting improvements in the availability of statistical data on remittances, and facilitation of remittances through improved regulatory and institutional arrangements, which, by increasing competition, help reduce costs.

8. Improving Statistics on Remittances • At the request of the G-8, the World Bank and IMF hosted an international meeting in January 2005 to prepare a roadmap for improving remittances data. Two steps were identified as necessary: • Simplifying, clarifying, and expanding the definitions of remittance-related items, to meet the needs of data users, in consistence with the new BOP Manual, BPM6. • Developing practical compilation guidance to support compilers. • Named after the city of its first meeting, the Luxembourg Group (Eurostat, IMF, OECD, World Bank, national experts) was created to prepare the International Transactions in Remittances: Guide for Compilers and Users. The RCG was published in 2009. Thank you, Mrs. Saadeh!

9. Improving Statistics on Remittances Some definitions (BPM6, A5-8) • Compensation of employees • Compensation of employees refers to the income of border, seasonal, and other short-term workers who are employed in an economy where they are not resident and of residents employed by nonresident entities. • Personal transfers • Personal transfers consist of all current transfers in cash or in kind made or received by resident households to or from nonresident households. • Workers’ remittances: Personal transfers replaces an item called “workers’ remittances” in the BPM5 standard presentation. According to BPM5, workers’ remittances are current transfers by migrants who are employed in new economies and considered residents there. To ensure consistency of time series, workers’ remittances are continued as a supplementary item. Unlike this previous item, personal transfers are defined independently of the source of income of the sending household, the relationship between the households, and the purpose for which the transfer is made. • Data in this presentation refer to workers’ remittances, rather than to personal transfers, for the continuity of time series.

10. Improving Statistics on Remittances: challenges • The biggest obstacle to improving data on remittances is the nature of the flows, often involving small transactions by private individuals using a variety of transaction channels, many of which are informal or personal. Being small, individual transactions often go undetected by typical data source systems, although the aggregate level of transactions may be substantial. At a global level, remittance receipts consistently exceed remittance payments, and the gap has been growing in recent years, indicating growing inconsistencies in the coverage and compilation of remittances data. • By definition, transactions through informal channels (manual transmission, hawala, etc.) cannot be captured by regular compilation systems, and need to be estimated based on a combination of sources (e.g. migration data, household surveys), or possibly mirror data. More on this later. • The steady, if slow, decrease in transactions costs is likely to encourage the use of formal channels. It is the compilers’ responsibility to take this opportunity to improve the collection of data in this framework: • All MTOs should be required to report (in addition to banks), • Lowering/removing reporting threshold, • Requesting geographical allocation of transactions in the reporting, • Of particular importance: the residence status of the customers of the beneficiaries, as it determines the nature of the transfer. • When combining data from regular compilation systems (banks, MTOs) and from estimates, there is a risk of double counting.

11. Improving Statistics on Remittances in the Region: mirror data • Two previous regional workshops (METAC, KSA, Kuwait, Qatar) • March 2009: a stock taking exercise was agreed upon to compare country practices for the compilation of remittances to ultimately foster consistency across countries, and to compare bilateral data as far possible • November 2011 (METAC): review of the results of the exercise; somewhat disappointing in terms of data comparison as only 3 countries had a geographical breakdown of remittances flows; necessity of 3rd workshop with participation of GCC countries as main senders of remittances to METAC countries. • This third workshop, for which METAC partnered with ESCWA to invite compilers from the central banks and statistical institutes of their membership, intends to identify asymmetries in remittances sent and received, and to discuss possible causes and solutions. Unfortunately, it seems that not many countries were able to provide the requested geographical breakdowns. However, the few that were received will enable fruitful discussions, and point to the necessity mentioned earlier to refine the reporting. In addition, the remittances matrix prepared by the World Bank, and reviewed by BDL, can also be used to support our discussions.

12. Improving Statistics on Remittances in the Region: mirror data • The ultimate objective of the series of workshop is to set up in the near future a regular exchange of data among the participating countries, aimed at ensuring symmetry in bilateral data at all periods. • The reconciled data could then be stored in a regional database managed by a volunteer country. • In the next presentation, ESCWA will talk about a project that seems quite promising for the improvement of data on remittances.

13. Agenda • Review of the agenda